A “For Sale” sign in front of a home in Hercules, California, USA, on Tuesday, May 31, 2022. Home buyers are facing a worsening affordability situation as mortgage rates are at their highest levels in more than a decade.
David Paul Morris | Bloomberg | Getty Images
Mortgage rates rose slightly last week for the second week in a row, but are still in a range that consumers seem to like.
According to the Mortgage Bankers Association's seasonally adjusted index, total mortgage application volume increased 9.9% last week compared to the previous week. An additional adjustment was made for the New Year holiday.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) increased from 6.76% to 6.81%, with points for loans with a 20% down payment remaining unchanged at 0.61 (including the origination fee). stayed. That rate peaked at around 8% in October and has been in the 7% range for much of the past year.
The number of applications to refinance a home loan increased 19% compared to the previous week and was 30% higher than the same week a year ago. The 30-year fixed rate was 39 basis points higher than a year ago, but 26 basis points lower than four weeks ago. Although there aren't many borrowers who can benefit from refinancing, considering how low interest rates were just two years ago, those who can are pushing back into the market.
Mortgage applications to purchase a home rose 6% this week, but were still 16% lower than the same week last year. Buyers continue to struggle with limited supply and overheated property prices.
“The increase in purchase and refinance applications for both conventional and government loans is promising early in the year, but was likely due to some post-holiday catch-up and year-end declines in interest rates,” said Joel Kan, an MBA economist, in a Press release. “Mortgage rates and applications have been volatile in recent weeks and overall activity remains low.”
However, real estate agents say they are seeing a new surge in demand from buyers who have been sidelined by the higher interest rate environment. More consumers also said they expect mortgage rates to decline further, according to a recent report from Fannie Mae.
Mortgage rates rose slightly again earlier this week but remain in the 6% range. The next major economic indicator comes on Thursday with the release of the monthly consumer price index. If it turns out higher than expected, a sign that more needs to be done to curb inflation, mortgage rates could rise even further.
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